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NIOS Solved Papers: Economics (318) - April' 2012


NIOS SOLVED PAPERS
APRIL’ 2012
ECONOMICS
(318)
[Time : 3 Hours ]
 [ Maximum Marks : 100]
Note : (i) This Question Paper consists of two Sections, viz., ‘A’ and ‘B’.
(ii) All questions from Section ‘A’ are to be attempted.
(iii) Section ‘B’ has got more than one option. Candidates are required to attempt questions from one option only.
SECTION–A
1. What is meant by market demand?                                 2
Ans.:- Market demand is the total amount of goods and services that all consumers are willing and able to purchase at a specific price in a marketplace. In other words, it represents how much consumers can and will buy from suppliers at a given price level in a market.

2. If total revenue at 2 units of output is Rs 200, what is average revenue?              2
Ans.:- Average revenue = total revenue / output
                Average revenue = 200/2
                Average revenue = 100

3. How is net domestic product at factor cost obtained from gross domestic product at market price?                   2
Ans.:- Indirect taxes minus subsidies are added to get from factor cost to market prices. Depreciation (or capital consumption allowance) is added to get from net domestic product to gross domestic product.

4. Calculate gross value added at market price from the following:                       2
a)            Value of output = Rs 1,500
b)            Intermediate consumption = Rs 700
Ans.:- Gross value added at market price = output – intermediate consumption
                                                                                  = 1500 – 700
                                                                                  = 800

5. What does ‘excess supply’ of a commodity mean?                2
Ans.:- In economics, an excess supply or economic surplus is a situation In which the quantity of a good or service supplied is more than the quantity demanded, and the price is above the equilibrium level determined by supply and demand.

6. How is the midpoint of a class interval obtained?                                           2
Ans.:- The midpoint of a class  interval obtained by dividing the sum of the upper and lower limits by 2 for example if the class interval is 10-20 than the midpoint will be 30/2= 15

7. What are intermediate goods?                           2
Ans.:- Intermediate goods are items that we use to create another products or the ingredients of finished goods. Suppliers of intermediate goods sell them to, for example, manufacturers for the inclusion in their final products.

8. If total variable cost for one unit is Rs 60, what is average variable cost?                  2
Ans.: If total variable cost for one unit is Rs. 60, than the average variable cost will also be Rs.60 because average variable cost = total variable cost / output or unit, therefore 60/1 = 60

9. State the law of demand.                                                     2
Ans.:- In microeconomics, the law of demand stats that, “conditional on all else being equal, as the price of a good increases, quantity demanded decreases, conversely, as the price of a good decreases, quantity demanded.” In other words, the law of demand describes an inverse relationship between price and quantity demanded of a good.

10. Distinguish between consumer goods and producer goods. Give examples.                  5
Ans.:- Difference between consumer goods and producer goods are given below:-
Consumer goods:
a)      Those goods that are purchased or available in the market to satisfy the human need are called consumer goods.
b)      It is the good which is produced at the end of the production line.
c)       In wine making process, the wine is called as consumer good.
Producer goods:
a)      Those goods that are available in the market and are purchased as raw material to produce another product, it is called as producer goods.
b)      It is the good which is used in the beginning of the production line.
c)       In the wine making process, as grapes are used in the preparation of wine, they are called as producer goods.

11. What is government budget? State three features of a government budget.               5
Ans.:- A government budget is an annual statement presenting the revenues and spending for a financial year that is often passed by the legislature, approved by the chief executive or president and presented by the Finance Minister to the nation. The budget is also known as the Annual Financial Statement of the country.
                Features of government budget are:-
(i)      It is a statement of estimates of government receipts and expenditure.
(ii)    Budget estimates pertain to a fixed period, generally a year.
(iii)   Expenditure and sources of finance are planned in accordance with the objectives of the government.

12. Explain the term ‘factor income’. Give two examples.          5
Ans.:- Factor income is income we receive from at least one of the four factors of production. The factors of production are the building-blocks of the economy. Factors of production are the inputs we use to produce things so that we can make a profit.
Economists divide the factors of production into four different categories: Land, Labor, capital and Enterprise.
Each factor of production, when we put it into use, provides us with an income, i.e., a factor income.
Examples:- “Returns received on factors of production: rent is return on land, wages on labor, interest on capital, and profit on entrepreneurship.”

13. Distinguish between substitute goods and complementary goods. Give examples.          5
Ans.:- The differences between the substitute goods and complimentary goods are:-
1. Substitute goods are independent to each other while as complementary goods are inter-dependent.
2. If the price of one good increases, the demand of its substitute good increases while on the other hand it the price of good increases, the demand of its complementary good decreases.
3. Cross elasticity of the substitute goods will be positive while as cross elasticity of complementary goods is negative.
4. Tea and Coffee is an example of substitute goods while as car and petroleum is an example of complementary goods.
5. Complementary goods are mostly sold in combination while as substitute goods are mostly sold in singularity.

14. Explain the concept of domestic territory of a country.                 5
Ans.:- Domestic Territory of a Country: By domestic territory, a layman means political frontiers of a country but in national accounting it is used in a wider sense. Domestic territory, as used in national accounting, has a special meaning and is much bigger than the political frontiers of a country. According to United Nation,” Economic territory is the geographical territory administered by a government within which persons, goods and capital circulate freely. “Clearly, freedom of circulation of persons, goods and capital is the basic criterion of economic territory for including in it. Thus, those parts of political frontiers of a country whose government does not enjoy these freedoms (e.g. embassies) are deemed to be outside the economic territory. Income generated within domestic territory during a year is called domestic income. Mind, embassies are not included in domestic territory as they are not administered by the government of the country in which they are located. Again note that domestic territory is also called economic territory.

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